MENA Q2 Outlook 2018

Please find enclosed our 2Q 2018 House views for Middle East equities.
In the first part of this report, we look at the first quarter in the rearview. While most developed equities markets and fixed income have been struggling recently, the first quarter of the year happened to be a very decent one for MENA equities as the S&P Pan Arab gained 7.2% over the period. Best performing markets were Egypt and Saudi.
Our flagship Al Mal Mena equities fund had one of its best quarter ever with a gain of +12.4% (net of fees and unlevered). In this report, we review in details the positive and negative contributors to relative performance. We also highlight that since the start of 2017, the fund is up +32.4% against +7.4%, i.e an alpha of 25% (with an ex-post tracking error or 6%).
In the second part of this report, we share our enthusiasm about the region as we continue to believe that the best is yet to come. Indeed, we see (at least) 5 reasons to be optimistic about MENA equities:

1: Structural reforms are for real
2: The macro picture is improving
3: Attractive valuations
4: MENA as a destination of capital
5: Alpha opportunities
We hope you will enjoy this quarterly report. Please do not hesitate to contact us if you have any questions / remarks.

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